Umberto Bossi, head of the Northern League party, will be minister in charge of institutional reforms.
Bossi, who once recommended using gunboats to scare off illegal immigrants, brought down Berlusconi's first government, but had the same reform portfolio in his second government until he had a stroke in 2004.
Roberto Maroni, the 53-year-old deputy leader of the Northern League, is to become interior minister.
Maroni held the position in Berlusconi's first government and was labour minister in his second.
The architect of controversial pension changes, he has a milder tone than Bossi but has also voiced a tough line on immigrants and poor Romanians blamed for crime.
Controversial appointment
The most controversial appointment is that of Roberto Calderoli, also from the Northern League, as minister for simplification.
Calderoli is known for outbursts against immigrants and Muslims.
He was forced to resign as institutional reforms minister in 2006 after wearing a T-shirt with cartoons of the Prophet Muhammad, a stunt blamed for protests in Libya in which 11 people died.
His ministry without portfolio is meant to reduce the number of laws and cut red tape.
Berlusconi will be sworn in on Thursday as head of Italy's 62nd administration since the second world war.
He has appointed 12 ministers with portfolio and nine without portfolio, including four women.
Berlusconi claimed victory in elections last month and will replace Romano Prodi, the centre-left leader.